East Africa - Fresh chances at Africa Growth and Opportunity Act Conference

September 2nd, 2009

 

 

Nairobi (Kenya) - Poor infrastructure. Exorbitant costs of doing business. Stringent selling conditions. Insecurity. Political instability. What next beyond 2015?

These and many other issues will be on top of the agenda as Africa and the US meet in Nairobi this week for the highly publicised 8th Africa Growth and Opportunity Act Conference.

By all accounts, the East African region has not exploited the opportunities created by the Act and now more than ever, the region will be seeking to collectively exploit the world’s second largest market after the EU, amid growing concerns that the business environment is deteriorating due to poor infrastructure and the effects of the global economic crisis, climate change and growing insecurity.

Special emphasis will be put on how sub-Saharan Africa can unlock and commercialise renewable energy sources while addressing climate change in the context of Agoa.

The meeting address head-on the challenges of renewable energy technology transfer and affordability; renewable energy investment and partnership; carbon trading as a catalyst for investment; policy frameworks and best practice for creating an enabling environment for trade and investment.

A timely innovation at the conference is the Toolkit, designed to provide practical knowledge of the Act and the rules and requirements for meeting its terms when exporting to the US.

Such areas as the overall rules of origin, apparel rules of origin, shipping and Customs documentation, product labelling and pricing will be explored. Lack of knowledge in these areas has been widely cited as a major obstacle to doing business with the US.

The conference is scheduled to be opened by Kenya’s Trade Minister Amos Kimunya, and US Congressman Jim McDermott.

Even as it comes to Kenya, the US has asked the host government to tackle the poor roads and numerous police roadblocks that jack up transport costs and make the country’s exports prohibitively expensive.

US embassy economic counsellor Eugene Young explained that poor roads and roadblocks not only lead to more fuel consumption, but also lead to delays in exports reaching the market. More delays are caused by lengthy Customs procedures at ports and airports.

While Mr Young spoke in Kenya, his sentiments reflect what is happening in all the five East African Community countries.

The transport delays that slow down performance have prevented the region from fully benefiting from Agoa, Mr Young said.

A recent World Bank study found that a 10 per cent reduction in the cost of transport on the continent would lead to a 25 per cent increase in trade.

While transport prices in East Africa are lower than in West or Central Africa, it still twice as expensive to move goods here as it is in the United States, even with the region’s low cost of labour, according to United States Agency for International Development’s Competitiveness and Trade Expansion Programme.

USAid regional trade advisor Stephanie Wilcock said while goods from other countries reach the US within 45 days, goods from the region can take up to 100 days from factory to the US.

“We hope the forum will come up with actions to be taken to take advantage of the remaining items not currently traded,” Mr Young added, indicating that the range of products under the current arrangement limits the continent’s ability to exploit the available opportunities.

According to long-time Africa trade facilitator and attorney Anthony Carroll, enhanced market access to the United States, a key feature of Agoa, remains a “critical component” for Africa’s long-term economic growth and development.

Mr Carroll, a member of the Corporate Council on Africa and vice president of Manchester Trade Ltd, a Washington-based consulting firm specialising in international trade and investment, said, looking back on African progress under Agoa, which was signed on May 18, 2000, that: “There are some countries that remain not deeply affected by Agoa’s opportunity, and in product categories... the overwhelming concentration of trade is in the hydrocarbon and mineral sector, and that masks some of the failure to penetrate other areas that might provide greater employment and deeper economic benefit, such as agribusiness.”

Illustrating his point, Mr Carroll said: “In agribusiness, there are certainly many areas in which Africa can be competitive.

Those include specialty coffee, teas, horticultural products, pisciculture (the breeding and raising of fish) and seafood products.

They are all showing good growth.”Looking ahead, Mr Carroll said the Cabinet-level US government presence at the conference “is certainly an endorsement of this administration’s embrace of Africa and underscores the importance of trade in our relationship with Africa.”Mr Carroll, whose firm is helping to co-ordinate the private sector and civil society components, said civil society will play an important role at the forum.

“In this day and age, corporate social responsibility requires an engagement and dialogue with civil society. We have seen that in both the trade agreements and ministerial of the World Trade Organization and in business practices”. He added that civil society groups that come to this forum are interested in enhancing trade relationships with the US.

Carroll said it is most important that the annual Agoa forums offer the opportunity to hear from Africans.

“The old idea of this Agoa Forum was to have a useful dialogue. I think the Africans have a better understanding often of what works and does not work in terms of market access and technical assistance… Africans would like to see some out-of-the-box thinking on how Agoa can be expanded and added to in many ways to try to continue to open this trade window,” he said.

 

source.The East African (Kenya), by Catherine Riungu - nca